Search form

Search form

The Renewable Fuels Association believes it is time for changes to U.S. ethanol tax policy "to meet taxpayers' expectations, as well as the needs of a growing and evolving industry," writes Bob Dinneen, the group's president and CEO. A variable-rate tax incentive that follows the price of oil would help address U.S. budget worries while mitigating the impact of unstable oil markets, Dinneen adds. Meanwhile, consumer-based tax incentives would expand the market for ethanol, and federal loan guarantees would help ensure the development of new fuel technologies, Dinneen argues.

Related Summaries

The Advanced Ethanol Council supports the Domestic Energy Promotion Act of 2011, which would shift the ethanol blender's tax credit into a variable-rate tax incentive tied to the price of crude oil, said Brooke Coleman, the group's executive director. The plan, spearheaded by Sen. Chuck Grassley, R-Iowa, also seeks to provide tax incentives for blender pumps and ethanol infrastructure and renew the tax credits for advanced-ethanol production that are due to lapse at the end of 2012. The proposal "will help our industry put steel in the ground and create jobs and economic activity that cannot be exported," said Coleman.

Congress should consider reforming the ethanol blender's tax credit into a variable-rate incentive tied to the market price of oil, according to Bob Dinneen, president and CEO of the Renewable Fuels Association. "A variable incentive would provide a fiscally responsible backstop to the oil-price volatility that would protect taxpayers and the investments in the industry," Dinneen writes. In addition, Congress should enact policies to promote the deployment of flexible-fuel vehicles, blender pumps and advanced biofuels, Dinneen adds.

Priority legislation, including spending bills, could provide a vehicle for ethanol tax reforms, according to officials from the Renewable Fuels Association and other industry groups. The ethanol industry agrees a replacement is needed for the blender's tax credit, which is due to lapse at year's end, the groups said. One possibility would be to convert the tax credit into a variable-rate incentive tied to the price of oil, said Bob Dinneen, RFA president and CEO.

Ethanol is a widely available fuel, said Sen. Tom Harkin, D-Iowa, unlike so-called "drop-in" oil substitutes, which are still about two decades from reaching the market. "By all means, we should continue apace with the development of drop-in fuels, but this is not an either-or proposition. Until drop-in fuels are commercially viable, we should continue to support ethanol," Harkin told members of the Senate Committee on Energy and Natural Resources.

The Alliance of Automobile Manufacturers opposes a plan by Sen. Tom Harkin, D-Iowa, to make 90% of vehicles able to run on E85 by model year 2016, said Shane Karr, the group's vice president for government affairs. However, "automakers would commit to a dialogue with Congress and the appropriate federal agencies" to discuss flex-fuel-vehicle production, Karr told members of the Senate Committee on Energy and Natural Resources. The Renewable Fuels Association believes that "while differences in approach may exist," the ethanol and auto industries "can find common ground," said Bob Dinneen, the group's president and CEO.